After Sale to Verizon, Terremark Execs in Catbird Seat with New Venture Fund Medina Capital

Manuel Medina, the founder and former chief executive of data-center services company Terremark, along with some former colleagues, launched a venture capital firm following the company’s sale to Verizon Communications for $1.4 billion last year.

On Tuesday the firm announced its second investment; putting $2.1 million (with more to follow) into Catbird Networks, a provider of network security for virtualized data centers.

Medina Capital

Manuel Medina, founding and managing partner of Medina Capital.

Catbird makes network security software that was built for virtual servers and networks, making it well-suited to exploit the shift to more software-based datacenters. That shift away from hardware “is going to change the entire security industry; it’s going from hardware to virtual,” said Medina, the founding and managing partner of Medina Capital.

The investment fits nicely with Medina Capital’s overall strategy–to invest in companies that will have a role in the shift to virtualization and cloud data centers, which Medina refers to as the shift to “agile IT” from “industrial IT.”

This transformation is a $4 trillion opportunity and one that he and his partners know well, having run one of the world’s biggest providers of IT services, he said, adding that it could be even bigger than the shift to the Internet that propelled Terremark’s growth.

Medina Capital will look to invest in between $10 million and $25 million into technology companies that are young, but have some established customers and products. “Early, but not so early that it’s just a technology play,” he said.

That’s the stage where Catbird Networks finds itself today. The company was one of the earliest to the virtualization security market, having launched its first product in the space in 2007. “Five years ago, we were telling a story that was way ahead of its time,” said Chief Executive Edmundo Costa. “Now there’s validation (in VMware’s $1.26 billion purchase of network virtualization company Nicira this summer) and big companies understand that the world has changed.”

Medina Capital’s first investment was Prolexic, a provider of technology for fending off denial of service attacks, where a website is taken offline by a sudden influx of malicious traffic.

The Miami-based firm, which is funded with its partners’ personal capital, expects to make between six and eight investments next year, Medina said.

Its other partners are Nelson Fonseca, president of Terremark until this September; Rene Rodriguez, who was formerly vice president of financial planning at Terremark, and Adam Smith, who was Terremark’s chief legal officer.

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